Mallinckrodt Approved to End Bankruptcy, Reduce Opioid Payments

Drugmaker Mallinckrodt Plc won court approval for a new debt-reduction plan that will slash about $1 billion from the sum the company must pay victims of America’s opioid epidemic.

US Bankruptcy Judge John Dorsey overruled objections from shareholders and a group of holdout bondholders during a court hearing Tuesday, in Wilmington, Delaware. They claimed that Mallinckrodt’s management incentive plan is unfair to creditors and that the manufacturer of opioid pain medication should have tried harder to resolve its debt woes without filing a Chapter 11 case.

Dorsey ruled that Mallinckrodt’s reorganization plan does not violate any bankruptcy rules and is ...